Meme stocks continued to rally Tuesday with GME, AMC, KOSS (KOSS), Virgin Galactic (SPCE) and BlackBerry (BB) all posting major early gains. Short sellers lost nearly $2.2 billion on GameStop stock so far this week, according to reports.
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AMC Entertainment (AMC) early Tuesday announced that on Monday it raised $250 million of equity capital after selling 72.5 million shares at an average price of $3.45 per share. Elsewhere Tuesday morning, Citi lifted its price target on AMC stock to $3.20 from $3.10, The Fly reported. Citi noted that AMC's Q1 revenue and adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — were in-line with its preliminary results from May 8. Citi also expects AMC will use new equity to pay down a portion of its debt. However, Citi still believes AMC remains overvalued at current levels.
Meanwhile, GameStop (GME) short sellers recorded another $1.36 billion in mark-to-market losses as of midday Tuesday, according to data firm S3 Partners. GME shorts suffered $838 million in mark-to-market losses during the huge rally Monday, CNBC reported, citing S3 Partners. Monday and Tuesday's action means GME shorts have suffered nearly $2.2 billion in mark-to-market losses so far this week.
Analysts at S3 expect more short covering on GME going forward. GME stock had what S3 definers as a 100/100 "squeeze score" prior to Monday's trading. A higher squeeze score indicates a greater risk of a short squeeze relative to its peers, according to S3.
AMC shorts suffered $244 million in mark-to-market losses as of midday Tuesday, after losing around $127 million on Monday, according to analysts with S3 Partners.
Roaring Kitty Returns
GameStop stock andAMC sharessoared Monday after Keith Gill, who sparked the meme stock rally during the pandemic, made his return to social media for the first time in three years. The New York Stock Exchange temporarily paused trading on GME stock multiple times early Monday as shares careened higher.
Gill, known by his social media name Roaring Kitty, onSunday night posted on social media platform Xfor the first time since June 2021. The post was an image of a meme implying he is "getting serious."
Gill rose to infamy in 2020 and 2021 as one of the key drivers for theGameStop(GME) short squeeze. The former financial broker and analyst was eventually called to testify in front of the House Financial Services Committee in February 2021 regarding a probe on potential market manipulation.
Retail investors celebrated with comments like "he's back," and "game on," or "just in time for the memecoin supercycle," in a reference to rising prices for smaller cryptocurrencies.
Previous Short Squeeze
Shares ofGME stock surged 688% in 2021. Individual investors coordinated a buying spree in the video-game retailer's shares using online message boards. The buying surge caught by surprise the short sellers who were betting the stock would fall. These "shorts" faced unlimited losses unless they bought the stock, further fueling gains.
It was an innovative, but controversial way to push GME stock higher.
GME stock ironically went up because it fell so much. And a large share of investors thought it would fall more.
Coming into 2021, GME shares had lost a third of their value over the previous five years. Investors betting the stock would fall, the short sellers, controlled GME stock shares in late 2019. That overly bearish bet set up a perfect environment for a massive short-squeeze rally.
The entire short squeeze saga was detailed in the movie "Dumb Money."
Meme Stock Action
GME stock pared gains to 60% Tuesday. Shares soared another 98% in early trade, adding to its 74.4% rally Monday. GME stock is now up 178% in 2024 and trading at its highest level since November 2021.
AMC stock jumped nearly 32% Tuesday after spiking 121% at the open, rebounding to its highest price since November. Shares soared 78.4% on Monday. AMC stock is now up 11.9% this year following the rally this week.
Other meme stocks climbed early Tuesday as the GME and AMC rallies gained steam. Koss shares leapt 40.7% Tuesday. KOSS stock spiked 36.7% Monday. BlackBerry shares pared gains to about 12% after bolting 23% in early trade. BB stock advanced nearly 7% Monday. Virgin Galactic stock flew 22.1% higher Tuesday, adding to its 9.2% gain Monday.
Other names including Beyond Meat (BYND), Rent The Runway (RENT) and SunPower (SPWR) were unusually active.
You can follow Harrison Miller for more stock news and updates on Twitter@IBD_Harrison
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GME Stock, AMC Roar Back To Life As Key Player In Meme Rally Returns
